Coronavirus: Airport handlers at risk of collapse
The four companies which manage ground operations at UK airports have warned that they are close to collapse, putting thousands of jobs at risk.
Swissport, WFS, Dnata and Menzies may not be able to continue operating for more than a few weeks, with some 25,000 jobs under threat.
In a joint letter, they called for urgent assistance from the government.
With most passenger flights suspended amid the coronavirus pandemic, their revenues have taken a hit.
In the letter addressed to the chancellor, they said: “We have all been able to weather previous crises, whether 9/11, Sars or the Icelandic volcanic eruption, but Covid-19 is different, as it is both global and longer-term.”
The firms provide 90% of airport handling services across the country, and say that airports could have to close if they collapse.
They warned that without their services, “the airport infrastructure in the UK would grind to a halt for up to four months”.
Airlines are cutting back
Between them, these four companies manage nearly all of the ground handling operations required by airlines at the UK’s airports. They include refuelling, cleaning, baggage transfer, departure gate services and the loading and unloading of cargo.
They do not work for the airports themselves, but are directly contracted by the airlines. They operate on a “pay-as-you-go” basis, charging for each service they provide.
However, airlines are cutting their passenger operations right back due to travel restrictions around the world associated with the coronavirus pandemic.
Cargo operations are continuing, and indeed some aircraft that would normally carry passengers have been operating as “ghost flights”, simply to transport freight. But even that source of revenue is beginning to decline.
As a result, the ground handlers say that they have lost 95% of their revenues over the past few weeks.
According to Swissport’s boss in Western Europe, Justin Holt, without immediate government support, the sector is “perilously close to collapse”.
If ground handlers were to go into administration, he claims, airports would simply be unable to operate.
“The aviation system is a triangle of airlines, airports and ground handling businesses”, he says.
“Without cargo and ground handling companies, international supply chains will stop functioning during the Covid-19 pandemic and recovery.”
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His concerns are shared by the airports themselves, according to Henk van Klaveren, spokesman for the Airport Operators Association.
“It is a very serious issue, particularly for smaller airports where there is only one ground handling operator”, he says.
“These airports still need to operate, even with fewer flights. There’s essential cargo, flights to isolated regions and so on.”
The worry within the industry is that while the airlines themselves enjoy a high profile – and the political clout that goes with it – ground handling services operate far below the radar, but need help more urgently. As one executive put it, “no one will see us quietly expire.”
Process ‘needs to be accelerated’
The four companies have welcomed Chancellor Rishi Sunak’s job retention scheme, under which a government grant will help to cover the wages of employees who have to be put on furlough.
But according to Swissport executive Justin Holt, the process needs to be accelerated, so that they can get the money quickly.
He says further measures will be needed as well, including a holiday from National Insurance payments and business rates.
A further concern is that these businesses are ineligible for the help offered by the government to struggling businesses under emergency schemes, because the four companies do not meet the right criteria. They have asked for those criteria to be relaxed.
The government, meanwhile, insists that the aviation sector is important to the UK economy, and can draw on an unprecedented range of measures designed to help companies through the crisis.